Novak has long been associated with the hospital, at 3240 W. Franklin Blvd. He led investors who bought the ailing hospital and transformed it into a privately owned for-profit organization in 1988, a year after it lost $2 million operating under the name Franklin Boulevard Hospital, news accounts from the time say.
The private owners renamed the organization Sacred Heart Hospital, though it is not affiliated with any church.
The conversion came amid a national wave of hospital acquisitions by private investors, and Novak was quoted numerous times over the years defending the business model of running a profit-seeking healthcare company. But mainly, Novak has kept a relatively low profile.
Guy Medaglia, CEO of St. Anthony Hospital, three miles south of Sacred Heart, said his reaction to the news of Novak's arrest was muted. “When that came across the wire … we couldn't say we were surprised or not surprised, because we just didn't know him,” he said.
Sacred Heart operates 96 beds today, and it had about 40 inpatients when federal authorities raided it last week to make arrests and uncover records that could aid the ongoing investigation into alleged kickback schemes at the hospital.
Jessica Thunberg, who works for an outside publicity firm that was hired after the arrests last week, said the hospital continues to operate as before. She said Chief Nursing Officer Jim Bailey has been appointed acting CEO of the hospital, though she declined to say who appointed him to that role. Thunberg also declined to identify members of the hospital's board of directors, or even say whether the hospital had such a governance group.
“It's a privately held corporation. I can't talk about that kind of information,” she said, adding that the hospital may also be constrained from giving out information because it is cooperating with law enforcement.
Authorities arrested Novak and his chief financial officer, Roy Payawal, 64, along with four doctors who were accused of accepting bribes: Dr. Venkateswara “V.R.” Kuchipudi, 66; Dr. Percy Conrad May Jr., 75; Dr. Subir Maitra, 73; and Dr. Shanin Moshiri, 57. Each faced one count of conspiring to violate the anti-kickback law that prohibits hospitals from paying doctors for referrals.
Federal officials seized at least $2 million in bank accounts affiliated with the alleged conspiracy in conjunction with the searches and seizures.
In addition to those six arrests on April 16, federal agents arrested Dr. Kenneth Nave, 50, on April 17 and charged him with prescribing narcotics to Sacred Heart patients even though his license to prescribe such drugs was suspended between 2002 and 2013.
Nave allegedly used an unnamed physician's Drug Enforcement Registration Number to prescribe the pills—the same number that was used for 101 prescriptions for 33 Sacred Heart patients between November 2012 and February 2013, according to police records.